What’s Going on at Stability AI?

Is the company behind Stable Diffusion in trouble?
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A shakeup at open-source generative AI startup Stability AI has furthered concerns about the company’s future. The abrupt departures of leading engineers and, most recently, Stability AI’s founder and Chief Executive Emad Mostaque’s resignation appear to be warning signs that one of the most popular AI startups could be in dire straits.

Leadership Concerns

Founded by Mostaque in 2020, Stability AI helped researchers Robin Rombach, Andreas Blattmann, and Dominik Lorenz develop Stable Diffusion, the text-to-image generation tool. The company was one of the earliest to make AI image generation available to the public and would eventually achieve a $1 billion valuation.

However, although Stability was riding high publicly after raising $173.8 million, things started to unravel. It’s alleged Mostaque made multiple exaggerated statements, including the university degrees he claimed to have received, the extent of his involvement in launching Stable Diffusion, and the relationships Stability had with major organizations. Stability’s founder refuted these claims, calling the reporting “really sad.

Consequently, more than nine months later, he’s gone. A company statement says Mostaque resigned to pursue decentralized AI. However, sources tell Bloomberg that at least one board member took issue with the founder’s leadership, urging Stability to add a co-CEO or president.

“I am proud two years after bringing on our first developer to have led Stability to hundreds of millions of downloads and the best models across modalities. I believe strongly in Stability AI’s mission and feel the company is in capable hands. It is now time to ensure AI remains open and decentralised.”

His lieutenants, Stability’s Chief Operating Officer Shan Shan Wong and Chief Technology Officer Christian Laforte, have been named interim co-CEOs.

Executive Exodus and Cost Concerns

His exit is only the recent departure the company has had to deal with during a rocky 12 months. During Mostaque’s tenure, Rombach, Blattmann and Lorenz left, along with Stability’s vice presidents for product, engineering, and R&D, its head of research, and a couple of LLM leads.

Curbing expenses is another concern for the AI firm. Sources told Bloomberg in November that Stability paid $8 million monthly for computing costs, worker salaries and other expenditures, with revenue covering only a fraction of that amount. The company responded, stating that revenue had increased “tenfold over the last year” and indicating it would further increase by the end of 2023 with the release of new products.

But can Stability keep up, especially as costs are accelerating, especially with infrastructure hardware? And how much are investors willing to put into the company?

Even with this rough patch in Stability’s history, its impact on artificial intelligence mustn’t be understated. The company has accelerated innovation in the generative AI space, with pundits crediting the startup for being a foundational force in the AI boom. In addition, it says its LLMs have been downloaded “hundreds of millions” of times.

A More Competitive Marketplace

The landscape of generative AI has undergone significant transformation since the initial release of Stable Diffusion. Stability now contends with competition from OpenAI’s DALL-E, Adobe’s Firefly, Midjourney, and various other model providers. Moreover, it isn’t the sole open-source AI startup in the arena. However, Stability’s notable strength lies in its research legacy. Nevertheless, with the departure of several key researchers, any competitive edge it once possessed may now be compromised.

What AI Action Should We Take?

While Stability faces its own uncertainties, users of its open-source models don’t have to fret, at least for now. Instead, it’s perhaps prudent to consider “what if” scenarios, thinking about how your product might operate should something befall Stability. Because Stable Diffusion and its kin are open-sourced, they’ll continue to operate should something negative impact the AI startup. If Stability is shuttered, its models won’t be maintained or see any future development.

As the adage goes, we must not “put all our eggs in one basket” and this certainly applies to artificial intelligence. Builders must ensure that there are alternative plans should an LLM provider cease to exist.

And don’t think a company that has raised hundreds of millions of dollars can’t suddenly implode and shutter. As the AI industry matures, the market will see early and even prominent startups go out of business, leaving behind those that can carve out sizeable and notable opportunities.

End Output

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